Treasury to sell warrants as 3 banks exit bailouts

WASHINGTON (AP) — The Treasury Department will auction off warrants for three big banks that it acquired as part of the bailout program.

Treasury says it will begin auctioning warrants for JPMorgan Chase & Co, Capital One Financial Corp. and TCF Financial Corp. All three banks got bailouts that they have since repaid.

Warrants are financial instruments that allow the holder to buy stock in the future at a fixed price. Treasury got the warrants as a deal-sweetener when it injected capital into banks.

Treasury usually negotiates a price with banks and allows them to repay the warrants themselves. The auctions are a fallback option when Treasury and the banks cannot agree on the price. These are the first auctions.

Treasury is using Deutsche Bank to run the auctions.